Saturday, August 21, 2010

Spotting Loan Modification Scams

In tough economic times, the offer of a quick fix or a miracle cure can often be too much to resist when a desperate homeowner is trying to catch up on past due mortgage payments.  With loan modification scams on the rise, a number of states have passed laws designed to protect consumers from predators offering fraudulent loan modification services.  The following tips can help consumers avoided getting scammed:
  1. Avoid any loan modification company that demands advance fees.  With limited exceptions, California has banned any type of advance fee to work with your lender to modify, refinance or reinstate your mortgage.  The obvious risk is that they may pocket your money and do nothing to save your home from foreclosure.
  2. Over the top guarantees.  No matter how much experience someone claims to have, nobody can truly guarantee that they can stop foreclosure or modify a loan.  The only thing they can really promise is that they will do their best to help you.
  3. The company advises you to stop paying your mortgage.  People who are behind on their mortgages are often having other bill problems and they can be tempted to spend the mortgage payment on other perceived needs.  When the lender wants a good faith payment during negotiations, the money is gone. Do not make your payments to the loan modification provider under an circumstances.
  4. The company asks you to sign over your house or sign paperwork that you haven't read.  A legitimate housing counselor would always give you time to review the document and understand it.
  5. A company/person you don’t know asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.
If you cannot afford an attorney to assist you with a loan modification, there are a number of free or low cost resources available to you:
  • U.S. Government Program to Refinance or Modify Loans:
    To find out if you qualify, and how much your loan might be reduced, Click Here .
  • HUD-Approved Foreclosure Counseling Agencies:
    Click Here to find a HUD-approved counselor or call 877-HUD-1515.
We do not offer loan modification services.  However we do help debtors file for Chapter 13 bankruptcy to get caught up on their mortgage payments and use bankruptcy to help remove second mortgages under certain circumstances.  If you live in the San Diego area, are suffering financial difficulties and have exhausted your loan modification options, please call us at (619) 448-2129 to see if bankruptcy can help you.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar, the San Diego County Bar Association and the National Association of Consumer Bankruptcy Attorneys. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

1 comment:

Amy said...

I just wanted to let you know how my neighbor almost lost her house through loan modification and all the paper work! She was told by one office she was approved and then a month later was given a foreclosure notice! Thankfully it got all all figured out and she is still my neighbor!!!